Analysis of previous deals:
30M chart of the EUR/USD pair
The EUR/USD pair traded very well on Monday. Volatility of the day was about 70 points. Considering that there were no important statistics on Monday, as well as no fundamental events, this is a very good market activity. Thus, it was possible and necessary to trade. On the 30-minute timeframe, the pair continued to move inside the horizontal channel and bounced off its lower border. It happened at night, however, the signal from this did not become weaker. However, we will consider it below, when studying the lower TF. For now, let's just say that there will be very few macroeconomic events this week, so the pair may well continue to move in the 1.1234-1.1355 range . Unfortunately, nothing else can be said about the technical picture now. It is flat.
5M chart of the EUR/USD pair
The pair's movements require more detailed consideration on the 5-minute timeframe. Although, by and large, the price moved in only one direction all day and did not change it. A rather difficult situation emerged in the morning, when the price bounced off the level of 1.1234. It did so at night, so these signals had to be skipped, however, at the time of the opening of the European trading session, the price went very close to the point of formation of these signals, so it was possible to take a risk and open long positions. This is the case when the risk was justified. Signals are often formed when the pair manages to go very high from the level where there was a rebound or breakthrough. In our case, the movement was very calm, so the price simply did not have time to go far up. Subsequently, the price went up another 60 points, but failed to reach the nearest target level. Therefore, a long position should have been closed at Take Profit (30-40 points). It should also be noted that there is not a single local level between the levels of 1.1234 and 1.1348 (lows, highs of individual days). This does not make sense for a flat, as the price will very often cross such levels and generate false signals.
How to trade on Tuesday:
On the 30-minute timeframe, the EUR/USD pair is in the 1.1234-1.1355 horizontal channel. Since a rebound followed from its lower border, so now we expect a round of upward movement to the upper border. If the pair manages to overcome any of the boundaries, this may mean the emergence of a new trend. On the 5-minute timeframe, the key levels for December 21 are 1.1186, 1.1227 - 1.1234, 1.1348-1.1355, 1.1422. Take Profit, as before, is set at a distance of 30-40 points. Stop Loss - to breakeven when the price passes in the right direction by 15 points. At the 5M TF, the target can be the nearest level if it is not too close or too far away. If it is, then you should act according to the situation or work according to Take Profit. Not a single important report will be published in the European Union and the US on Tuesday. Thus, volatility may be low, but at the same time not weak, as Monday showed that the markets are ready to continue trading the pair.
Basic rules of the trading system:
1) The signal strength is calculated by the time it took to form the signal (bounce or overcome the level). The less time it took, the stronger the signal.
2) If two or more deals were opened near a certain level based on false signals (which did not trigger Take Profit or the nearest target level), then all subsequent signals from this level should be ignored.
3) In a flat, any pair can form a lot of false signals or not form them at all. But in any case, at the first signs of a flat, it is better to stop trading.
4) Trade deals are opened in the time period between the beginning of the European session and until the middle of the American one, when all deals must be closed manually.
5) On the 30-minute TF, using signals from the MACD indicator, you can trade only if there is good volatility and a trend, which is confirmed by a trend line or a trend channel.
6) If two levels are located too close to each other (from 5 to 15 points), then they should be considered as an area of support or resistance.
On the chart:
Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now.
The MACD indicator (14,22,3) consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines).
Important speeches and reports (always contained in the news calendar) can greatly influence the movement of a currency pair. Therefore, during their exit, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.